Consumer – Cov Financial Serviceshttps://www.covfinancialservices.com
Developments in the Financial Services IndustrySat, 31 Aug 2019 17:40:20 +0000en-UShourly1https://wordpress.org/?v=4.9.11CFPB Fall Previewhttps://www.covfinancialservices.com/2019/08/cfpb-fall-preview/
Sat, 31 Aug 2019 17:40:20 +0000https://www.covfinancialservices.com/?p=8293Continue Reading]]>As we turn the page on the summer, the Consumer Financial Protection Bureau is poised to be active – and actively overseen – in the months ahead. Here’s an overview of some of the issues and events ahead.

New Leadership

The search for a new Associate Director for Supervision, Enforcement, and Fair Lending is in its final stages. Here are four things to watch for:

This will be one of Director Kraninger’s signature hires as Director, and may contain clues regarding the direction and tone for the rest of her term.

The SEFL job posting did not mention the reorganization, proposed by Acting Director Mulvaney in January 2018, that would have moved Fair Lending to the Director’s office. The announcement of the Associate Director may provide an indication of whether that move has been completed – or abandoned.

One early task for the Associate Director will be helping choose a new Assistant Director for Enforcement. Enforcement has been led by an acting head since May 2019.

The appointment of new “policy directors” by Acting Director Mick Mulvaney provided the new Director with a way to help guide senior CFPB staff appointed by Director Cordray. The appointment of a new Associate Director could mean such guidance is no longer needed – or demonstrate this new approach will be continued.

September 16, 2019: The comment period closes for the Bureau’s advance notice of proposed rulemaking regarding the government-sponsored enterprise patch in the Ability to Repay/Qualified Mortgage rule.

October 15, 2019: The comment period closes for the Bureau’s May 2019 proposed amendments to Regulation C relating to the coverage thresholds for reporting data on closed-end mortgage loans and open-end lines of credit, and partial exemptions under the Home Mortgage Disclosure Act (“HMDA”).

October 15, 2019: The comment period closes for the Bureau’s advance notice of proposed rulemaking regarding the data required by Regulation C, which implements HMDA, and the reporting of certain transactions under Regulation C.

December 6, 2019: The parties must again file a status report in Community Financial Services Association of America v. CFPB, in which the court recently continued its stay of the litigation and the compliance date for both the underwriting provisions and the payment provisions of the Payday Rule.

Other likely events in the fall include:

The release of a Bureau study, announced in Director Kraninger’s July 18 remarks before the Exchequer Club in Washington D.C., and conducted in partnership with H&R Block, exploring whether prepaid cards could encourage consumers to save more during tax refund season.

The Bureau may hold additional symposia in the fall. The Bureau held its first symposium on June 25, which focused on defining abusive acts or practices. Future topics may include behavioral law and economics, small business loan data collection, disparate impact and the Equal Credit Opportunity Act, cost-benefit analysis, and consumer authorized financial data sharing.

House Financial Services Committee

House Financial Services Chair Maxine Waters (D-CA) has promised vigorous oversight of the CFPB. In the last month alone, she has:

Expressed concern in an August 13 letter to Director Kraninger that the CFPB had failed to fill the position of student loan ombudsman.

Expressed concern in an August 21 statement with Director Kraninger’s announcement of Robert G. Cameron as student loan ombudsman.

Expressed concern in an August 23 letter with the Bureau’s proposal to rescind the underwriting provisions of the Payday Rule.

Announced a hearing on student borrowers and student loan servicers on September 10, 2019.

The Committee’s fall 2019 priorities include oversight hearings with Director Kraninger and a focus on innovations in loan instruments, data privacy, the use of artificial intelligence in financial services, and the evolution of payments. The following hearings are already scheduled:

September 4 at 10:00 AM: “Examining Discrimination and Other Barriers to Consumer Credit, Homeownership, and Financial Inclusion in Texas”

September 12 at 9:30 AM: “The Future of Identity in Financial Services: Threats, Challenges, and Opportunities”

September 24 at 2:00 PM: “Examining the Racial and Gender Wealth Gap in America”

September 26 at 10:00 AM: “Examining Legislation to Protect Consumers and Small Business Owners from Abusive Debt Collection Practices”

]]>House Financial Services Committee Advances FCRA Reform Legislationhttps://www.covfinancialservices.com/2019/07/house-financial-services-committee-advances-fcra-reform-legislation/
Fri, 12 Jul 2019 20:49:12 +0000https://www.covfinancialservices.com/?p=8249Continue Reading]]>On July 11, the House Financial Services Committee held a markup for a series of bills designed to reform the credit reporting system and the Fair Credit Reporting Act (“FCRA”). Each bill passed on a party-line vote. The associated hearing was titled “Who’s Keeping Score? Holding Credit Bureaus Accountable and Repairing a Broken System.”

In her opening statement, Committee Chairwoman Maxine Waters (D-CA) stated her belief that “our credit reporting system is deeply broken.” She added that “[c]onsumers make more complaints about the credit reporting process to the Consumer Financial Protection Bureau than any other issue,” and that it “is exceedingly common that credit reports are filled with errors.”

The Committee considered the following credit reporting reform bills, each introduced by a Democratic member:

The Free Credit Scores for Consumers Act of 2019, which would expand consumer disclosure rights. In particular, nationwide consumer reporting agencies (“CRAs”) would be required to disclose consumer credit scores annually upon request. Further, any CRA would be required to disclose to consumers their full file and credit score when that consumer obtains a fraud alert or security freeze, or has disputed information on the credit report.

The bills can now be considered by the full House of Representatives. Were they to pass the full House, the lack of Republican supports suggests they would face significant challenges in the Senate.

]]>FDIC Releases First Edition of Consumer Compliance Supervisory Highlightshttps://www.covfinancialservices.com/2019/06/fdic-releases-first-edition-of-consumer-compliance-supervisory-highlights/
Mon, 24 Jun 2019 14:43:45 +0000https://www.covfinancialservices.com/?p=8238Continue Reading]]>On June 13, 2019, the FDIC released its first edition of Consumer Compliance Supervisory Highlights, the purpose of which is to increase transparency regarding the FDIC’s consumer compliance supervisory activities. The publication provides a high-level overview of the consumer compliance issues identified through approximately 1,200 consumer compliance examinations conducted in 2018 for non-member state-chartered banks and thrifts.

In describing these supervisory highlights, the FDIC noted that 98% of all FDIC-supervised institutions were rated satisfactory or better for consumer compliance. However, the FDIC brought 21 consumer compliance-related formal enforcement actions that included civil money penalties totaling approximately $3.5 million. The institutions subject to these formal enforcement actions paid approximately $18.1 million in required restitution and $4 million in voluntary restitution. The most frequently cited violations in 2018 included the Truth in Lending Act (Regulation Z), the Truth in Savings Act (Regulation DD), Electronic Funds Transfer (Regulation E), the Flood Disaster Protection Act, and the Equal Credit Opportunity Act/Regulation B.

In the publication, the FDIC discusses a number of areas in which it has found violations, including overdraft programs (unfair and deceptive acts or practices), mortgage loan referral payments to third parties (RESPA), electronic fund transfers (Regulation E), skip-a-payment loan programs (unfair or deceptive acts or practices), and finance charges and annual percentage rate (“APR”) calculations (Regulation Z). These findings are described below. In addition, the publication includes summaries of actions taken to mitigate the risks of violations.

According to the FDIC, the “most salient issues” identified in the 2018 supervisory examinations include:

Overdraft Programs: The FDIC found that some institutions used an available balance method to assess overdraft fees for any transaction that settles against a negative balance, even though the institution authorized the transaction based on sufficient funds available at the time of authorization. According to the FDIC, customers may have incurred unwarranted overdraft fees as a result of the available balance method, and some institutions did not appropriately disclose the available balance method to customers. The FDIC found that these practices violated consumer laws and regulations, including Section 5 of the Federal Trade Commission Act (“FTC Act”), which prohibits unfair and deceptive acts or practices.

Regulation E Violations: Through its supervisory process, the FDIC also found that some financial institutions (i) incorrectly calculated consumers’ liability for unauthorized transfers; and (ii) violated Regulation E’s requirements for error resolution, including by failing to promptly initiate an investigation, discouraging customers from filing error resolution requests, and failing to provide notice that the financial institution completed the investigation.

Skip-a-Payment Loan Programs: In connection with “Skip-a-Payment” loan programs, the FDIC found that some institutions failed to adequately disclose that skipping a payment would lead to the accrual of additional interest. The FDIC also found that some institutions did not disclose that skipping a payment would not affect the customer’s escrow payment options. Finally, the FDIC found that some institutions assessed late fees for the month the customer’s payment was skipped. The FDIC found that these issues were unfair or deceptive acts or practices in violation of Section 5 of the FTC Act.

Finance Charges and APR Calculations: The last “salient issue” involved failures to properly disclose or accurately calculate finance charges or APRs, which resulted in finance charges and APRs that exceeded the tolerances under Regulation Z.

]]>FDIC Chairman McWilliams Speaks at Community Development Bankers Association Meetinghttps://www.covfinancialservices.com/2019/06/fdic-chairman-mcwilliams-speaks-at-community-development-bankers-association-meeting/
Fri, 07 Jun 2019 17:00:23 +0000https://www.covfinancialservices.com/?p=8229Continue Reading]]>On June 4, 2019, Jelena McWilliams, the Chairman of the Federal Deposit Insurance Corporation (“FDIC”), addressed the Community Development Bankers Association. Her remarks emphasized the importance of community banking in the U.S. economy while also touching upon a number of related topics including Minority Depositary Institutions (“MDIs”), the Community Reinvestment Act (“CRA”), Small-Dollar Lending and Innovation.

Minority Depositary Institutions: Chairman McWilliams noted FDIC’s statutory responsibility to preserve and promote the health of MDIs and outlined steps that the FDIC is taking to support MDIs. These include: appointing a full-time executive to manage MDI programs across the FDIC; increasing the representation of MDI’s on the FDIC’s Community Bank Advisory Committee; hosting roundtables and conferences to promote and explore the work of MDIs; publishing a study on the impact of MDIs in communities; and providing technical assistance to groups seeking to form new MDIs.

Community Reinvestment Act: Under the CRA, federally-insured banks are required to meet the credit needs of their communities, including low and moderate-income neighborhoods. Chairman McWilliams noted that the banking landscape has changed dramatically since the law was enacted. For that reason, the FDIC, along with the other federal banking agencies, is looking at ways to modernize the CRA framework. Chairman McWilliams indicated that she expects the agencies’ much anticipated CRA proposal will focus on: clarifying what activities qualify for CRA credit; how to assess lending, including digital lending, by banks outside the geographic area where their main branches are located; and ensuring that CRA investments target those most in need in a bank’s community.

Small-Dollar Lending: According to a recent study by the Federal Reserve Board, nearly four in 10 households cannot cover a $400 emergency with cash. Chairman McWilliams said that the FDIC is seeking ways to encourage banks to step into this underserved space. In November, the FDIC issued a request for information (“RFI”) on small-dollar credit products to gather information on consumer demand, products currently offered by banks, and measures the FDIC can take to encourage banks to offer small-dollar credit products. Following on that RFI, it appears likely that the FDIC will take the lead in developing guidance or a regulation on small dollar lending that could be issued jointly with the Federal Reserve Board and the Office of the Comptroller of the Currency.

Innovation: The FDIC is establishing a new internal office to promote innovation in the industry. Chairman McWilliams is particularly focused on identifying policy changes necessary to foster innovation and leveraging technology (including fintech) to expand access to the banking system for those who are unbanked or underbanked.

Minority Depositary Institutions: Chairman McWilliams noted FDIC’s statutory responsibility to preserve and promote the health of MDIs and outlined steps that the FDIC is taking to support MDIs. These include: appointing a full-time executive to manage MDI programs across the FDIC; increasing the representation of MDI’s on the FDIC’s Community Bank Advisory Committee; hosting roundtables and conferences to promote and explore the work of MDIs; publishing a study on the impact of MDIs in communities; and providing technical assistance to groups seeking to form new MDIs.

Community Reinvestment Act: Under the CRA, federally-insured banks are required to meet the credit needs of their communities, including low and moderate-income neighborhoods. Chairman McWilliams noted that the banking landscape has changed dramatically since the law was enacted. For that reason, the FDIC, along with the other federal banking agencies, is looking at ways to modernize the CRA framework. Chairman McWilliams indicated that she expects the agencies’ much anticipated CRA proposal will focus on: clarifying what activities qualify for CRA credit; how to assess lending, including digital lending, by banks outside the geographic area where their main branches are located; and ensuring that CRA investments target those most in need in a bank’s community.

Small-Dollar Lending: According to a recent study by the Federal Reserve Board, nearly four in 10 households cannot cover a $400 emergency with cash. Chairman McWilliams said that the FDIC is seeking ways to encourage banks to step into this underserved space. In November, the FDIC issued a request for information (“RFI”) on small-dollar credit products to gather information on consumer demand, products currently offered by banks, and measures the FDIC can take to encourage banks to offer small-dollar credit products. Following on that RFI, it appears likely that the FDIC will take the lead in developing guidance or a regulation on small dollar lending that could be issued jointly with the Federal Reserve Board and the Office of the Comptroller of the Currency.

Innovation: The FDIC is establishing a new internal office to promote innovation in the industry. Chairman McWilliams is particularly focused on identifying policy changes necessary to foster innovation and leveraging technology (including fintech) to expand access to the banking system for those who are unbanked or underbanked.

Community Banks: As of March 31, the U.S. has 4,390 community banks. Chairman McWilliams believes that supporting community banks is of paramount importance. Such banks are intertwined with the communities they serve, and the FDIC is the primary Federal supervisor for many of them. The Chairman is halfway through a 50-state community bank listening tour. Informed by her meetings, she has directed the FDIC to: actively seek ways to reduce the regulatory burden on community banks; encourage community banking, including by the establishment of de novo banks; promote the nation’s MDIs; and modernize the CRA, by clarifying CRA obligations for institutions and adopting a regulatory framework that encourages banks to offer products and services to low and moderate-income households.

Minority Depositary Institutions: Chairman McWilliams noted FDIC’s statutory responsibility to preserve and promote the health of MDIs and outlined steps that the FDIC is taking to support MDIs. These include: appointing a full-time executive to manage MDI programs across the FDIC; increasing the representation of MDI’s on the FDIC’s Community Bank Advisory Committee; hosting roundtables and conferences to promote and explore the work of MDIs; publishing a study on the impact of MDIs in communities; and providing technical assistance to groups seeking to form new MDIs.

Community Reinvestment Act: Under the CRA, federally-insured banks are required to meet the credit needs of their communities, including low and moderate-income neighborhoods. Chairman McWilliams noted that the banking landscape has changed dramatically since the law was enacted. For that reason, the FDIC, along with the other federal banking agencies, is looking at ways to modernize the CRA framework. Chairman McWilliams indicated that she expects the agencies’ much anticipated CRA proposal will focus on: clarifying what activities qualify for CRA credit; how to assess lending, including digital lending, by banks outside the geographic area where their main branches are located; and ensuring that CRA investments target those most in need in a bank’s community.

Small-Dollar Lending: According to a recent study by the Federal Reserve Board, nearly four in 10 households cannot cover a $400 emergency with cash. Chairman McWilliams said that the FDIC is seeking ways to encourage banks to step into this underserved space. In November, the FDIC issued a request for information (“RFI”) on small-dollar credit products to gather information on consumer demand, products currently offered by banks, and measures the FDIC can take to encourage banks to offer small-dollar credit products. Following on that RFI, it appears likely that the FDIC will take the lead in developing guidance or a regulation on small dollar lending that could be issued jointly with the Federal Reserve Board and the Office of the Comptroller of the Currency.

Innovation: The FDIC is establishing a new internal office to promote innovation in the industry. Chairman McWilliams is particularly focused on identifying policy changes necessary to foster innovation and leveraging technology (including fintech) to expand access to the banking system for those who are unbanked or underbanked.

]]>CFPB Proposes Debt Collection Rule under FDCPAhttps://www.covfinancialservices.com/2019/05/cfpb-proposes-debt-collection-rule-under-fdcpa/
Tue, 07 May 2019 16:06:26 +0000https://www.covfinancialservices.com/?p=8195Continue Reading]]>On May 7, 2019, the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) released its long-anticipated proposed rule on debt collection. The proposed rule would amend Regulation F, which implements the Fair Debt Collection Practices Act (“FDCPA”), and would govern the activities of debt collectors, as defined in the FDCPA. Certain provisions also rely on the Bureau’s authority under sections 1031 and 1036 of the Dodd-Frank Act to regulate unfair, deceptive, or abusive acts or practices. CFPB Director Kathleen Kraninger described the Bureau’s action as an effort to “modernize the legal regime for debt collection” and “ensure we have clear rules of the road where consumers know their rights and debt collectors know their limitations.”

The proposed rule generally would:

Limit debt collectors to no more than seven attempts by telephone per week to reach a consumer about a specific debt;

Require debt collectors to send consumers a disclosure with certain information about the debt and related consumer protections within five days of the initial communication, including an itemization of the debt and plain-language information about how a consumer may respond to a collection attempt along with a “tear-off” that consumers could use to respond to the collection attempt;

Clarify how debt collectors may use newer technologies that have developed since the FDCPA was enacted in 1977, such as voicemails, emails and text messages, to communicate with consumers, including time and place restrictions, and how consumers can limit the media for debt collector communications;

Prohibit a debt collector from suing or threatening to sue a consumer to collect a time-barred debt;

Clarify a debt collector’s ability to communicate with the personal representative of a deceased consumer;

Prohibit a debt collector from furnishing information about a debt to a consumer reporting agency unless the debt collector has communicated with the consumer about the debt; and

Prohibit sales, transfers, or placement for collection if a debt collector knows or should know that the debt has been discharged in bankruptcy or is the subject of an identity theft report.

The comment period ends 90 days after publication in the Federal Register. The proposed effective date of the final rule would be one year after the final rule is published in the Federal Register.

]]>CFPB Proposes Revisions to HMDA to Provide Relief for Smaller Lendershttps://www.covfinancialservices.com/2019/05/cfpb-proposes-revisions-to-hmda-to-provide-relief-for-smaller-lenders/
Tue, 07 May 2019 16:05:05 +0000https://www.covfinancialservices.com/?p=8201Continue Reading]]>On May 2, 2019, the Consumer Financial Protection Bureau (“CFPB”) released a notice of proposed rulemaking (the “NPRM”) proposing to raise coverage thresholds for collecting and reporting data under the Home Mortgage Disclosure Act (“HMDA”). In addition, the Bureau released an advanced notice of proposed rulemaking (the “ANPR”) requesting comment on the costs and benefits of certain HMDA reporting requirements. CFPB Director Kraninger described the proposals as providing “much needed relief to smaller community banks and credit unions while still providing federal regulators and other stakeholders with the information we need.”

The NPRM proposes changes to the HMDA coverage thresholds for both closed-end mortgages and open-end lines of credit:

Closed-end mortgage loans: The current coverage threshold is originating 25 or more closed-end mortgage loans in both of the two prior years. The NPRM proposes two alternatives – raising the threshold to either 50 or 100 closed-end mortgage loan originations.

Open–end lines of credit: The current coverage threshold is temporarily set at 500 or more open-end lines of credit in each of the two prior years. The proposed rule would extend this temporary threshold until January 1, 2022, and would set the permanent threshold at 200 open-end lines of credit.

The ANPR solicits comment on the costs and benefits of reporting certain data points currently required under HMDA, based on industry’s “concerns about the burden associated with reporting certain of the new or revised data points relative to the value of the information in serving HMDA’s purposes.” Examples of such data points include whether a borrower owns or leases the land on which a manufactured home is located, disaggregated ethnicity categories, and free-form text fields for certain data fields, including the reason for loan denial.

The NPRM and ANPR are scheduled to be published in the Federal Register on May 8, 2019. Comments will be due 60 days after publication, on July 7, 2018.

]]>New York DFS Revamps Its Consumer Protection Armhttps://www.covfinancialservices.com/2019/05/new-york-dfs-revamps-its-consumer-protection-arm/
Tue, 07 May 2019 16:03:58 +0000https://www.covfinancialservices.com/?p=8199Continue Reading]]>On April 29, 2019 the New York State Department of Financial Services (“DFS”) announced that it has created a new division, called the Consumer Protection and Financial Enforcement Division, which combines the previously separate Enforcement Division and Financial Frauds and Consumer Protection Division.

The new division will be “responsible for protecting and educating consumers and fighting consumer fraud, as well as ensuring that regulated entities comply with New York and federal law in relation to their activities serving the public.” DFS further indicated that the division will have a particular focus on “review and response to cybersecurity events and the development of supervisory, regulatory and enforcement policy and direction in the area of financial crimes.”

In January 2018, then-Superintendent of Financial Services Maria Vullo stated that DFS would “lead and take action to fill the increasing number of regulatory voids” that she believed had been created by the Consumer Financial Protection Bureau’s “troublesome policy shift away from consumer protection” under the Trump Administration. This reorganization of DFS can potentially be seen as part of that effort.

Katherine Lemire, formerly an Assistant United States Attorney in the Southern District of New York and a partner at an international compliance and investigative consulting firm, will lead the new division.

]]>CFPB Mulling Changes to Remittance Rulehttps://www.covfinancialservices.com/2019/05/cfpb-mulling-changes-to-remittance-rule/
Tue, 07 May 2019 16:00:27 +0000https://www.covfinancialservices.com/?p=8197Continue Reading]]>On April 25, 2019, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) published a Request for Information (the “RFI”) related to the Remittance Rule, the Bureau’s existing regulation that implements the Electronic Funds Transfer Act (“EFTA”) as amended by the Dodd-Frank Act. The Remittance Rule requires certain disclosures in the case of remittance payments (electronic funds transfers from the United States to recipients in foreign countries) but only if the transfer is initiated by a financial institution, money transmitter, or other person that provides remittance transfers in the “normal course of business” (each, a “remittance transfer provider”).

The Remittance Rule generally requires that a remittance transfer provider disclose the actual exchange rate and the amount that will be received by the recipient at the time the consumer pays for the remittance transfer. The EFTA contains a temporary exception to that requirement that allows certain insured depository institutions to provide estimated exchange rates and amounts. The temporary exception reflects the fact that banks and credit unions that make remittance transfers using the correspondent banking system cannot always know all of the fees that will be charged by other banks, including fees charged as a result of foreign laws that prevent institutions from knowing the currency exchange rate in advance.

The CFPB exercised its authority to extend the temporary exception until July 2020. The temporary exception expires in July 2020, and the CFPB lacks the statutory authority to extend the exception a second time. The RFI seeks input on how to mitigate the impact of the expiration of the temporary exception. The RFI includes twelve questions related to the expiration of the temporary exception and its expected impact; the Bureau will use input from stakeholders to determine its next steps.

A safe harbor within the Remittance Rule exempts remittance transfer providers that initiate 100 or fewer remittance transfers per year. The RFI asks whether the number of remittance transfers permitted under this “normal course of business” safe harbor should be increased, and also whether an exception for small financial institutions is warranted.

The deadline for submitting comments on the RFI is June 28, 2019.

]]>CFPB Director Kraninger Outlines Approach in First Major Speechhttps://www.covfinancialservices.com/2019/04/cfpb-director-kraninger-outlines-approach-in-first-major-speech/
Mon, 22 Apr 2019 20:54:26 +0000https://www.covfinancialservices.com/?p=8183Continue Reading]]>On April 17, 2019, CFPB Director Kathleen Kraninger outlined her approach in executing the Bureau’s statutory mission in a speech to the Bipartisan Policy Center. This was Director Kraninger’s first major speech since taking the helm at the Bureau. Kraninger’s remarks were organized around the tools that the Bureau will utilize to advance its core mission of preventing consumer harm. The speech was consistent with the Director’s recent testimony to House and Senate Committees but also provided a number of clues as to the priorities of the Bureau in the near future.

Director Kraninger began by stating the Bureau’s focus, under her leadership, will be the prevention of harm to consumers. She went on to say the Bureau would deploy four tools—education, rulemaking, supervision and enforcement—to realize this overarching mission.

Education. Director Kraninger stated that the Bureau will provide education programming intended to empower consumers to make optimal financial decisions. The programming will outline approaches to consumer savings, especially as they pertain to emergency needs.

Rulemakings. The Bureau will pursue rulemaking “deliberately and transparently.” Director Kraninger indicated that rulemaking would provide “clear rules of the road” to regulated or supervised entities. The Director noted the Bureau must recognize imposing additional compliance costs on financial service providers can impact consumer access to credit. She indicated that a proposed rule pertaining to debt collection practices are forthcoming and, among other things, would limit the number of calls collectors can make on a weekly basis, address the use of email and text communications in debt collection, and require certain disclosures at the beginning of the collection process.

Supervision. Director Kraninger stated an intent to review the Bureau’s approach to examinations, while emphasizing that CFPB examinations will assess whether supervised entities are meeting their obligations by promoting “a culture of compliance” that prevents harm in the first instance. The Director also set forth a commitment to enhance the Bureau’s coordination and collaboration with other federal regulators.

Enforcement. The Director stated that enforcement is an essential tool for the Bureau because education, rulemaking and supervision will not address every consumer protection issue. Following an evaluation of the Bureau’s approach to investigations, the Director intends to implement an enforcement regime that will “foster compliance, help prevent consumer harm, and right wrongs.” The Bureau is also committed to partnerships with state attorneys general and bank supervisors.

Finally Director Kraninger announced the Bureau will launch a “symposia series” on topics related to the CFPB’s mission. The first symposium will focus on clarifying the meaning of “abusive acts or practices” in the Dodd-Frank Act.

The Director’s speech was closely watched by stakeholders. Members of the financial services industry viewed the speech favorably, with the CEO of the Consumer Bankers Association issuing a statement applauding the director for a “common-sense, principled approach.” Consumer advocates, on the other hand, expressed concerns about the Director’s promised modernization of debt collection rules.

]]>CFPB Enhances Advisory Committee Chartershttps://www.covfinancialservices.com/2019/03/cfpb-enhances-advisory-committee-charters/
Mon, 25 Mar 2019 18:32:55 +0000https://www.covfinancialservices.com/?p=8107Continue Reading]]>On March 21, 2019, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) announced that it was enhancing its advisory committee charters. The announcement follows former Acting Director Mick Mulvaney’s decision in June 2018 to reduce the number of members on the committees and decrease membership terms.

Director Kathy Kraninger described these changes as a product of her three-month listening tour, which included meetings with current and former advisory committee members:

I’ve seen firsthand how the Bureau benefits from the valuable input provided by committee members. I have also seen how the joint committee meeting is resulting in members sharpening their ideas by engaging in a thorough dialogue . . . . These enhancements demonstrate my commitment to ensuring that the Bureau’s advisory committees are helping to improve our work on behalf of consumers.

Effective fiscal year 2020:

The Consumer Advisory Board (“CAB”), Community Bank Advisory Council (“CBAC”), and Credit Union Advisory Council (“CUAC”) will increase the number of joint, public, in-person meetings from two to three times a year.

The Academic Research Council (“ARC”) will meet separately, in-person, twice a year and will become a director-level advisory committee.

The advisory committees will “expand their focus to broad policy matters.”

The CFPB is extending membership terms for each committee from one to two years, and terms will be staggered. The one-year terms of existing members will expire on September 2019, but the Bureau will provide a one-year term extension to half of the current members.

Each committee will be assigned a vice-chair in addition to the chair, and both the chair and vice-chair will serve one-year terms, with the vice-chair assuming the chair the following year.

The Bureau is accepting applications for its advisory committees until May 5, 2019. Applications to join a committee may be submitted online.